ALBANY, N.Y. – The New York State Court of Appeals, the state’s highest court, agreed today to hear an appeal from Hudson Valley FCU, which claims its status as a federally chartered credit union should exempt it from the state’s mortgage recordation tax on all real estate transactions.
The state appeals court also agreed to allow the U.S. Department of Justice to argue on behalf of the credit union that the Federal CU Act exempts all federal credit unions from state taxes like the New York levy.
The stakes in the case are huge, with federally chartered credit unions like Hudson Valley FCU paying tens of millions of dollars in the mortgage tax each year.
“We’ve been dismissed at the two lower court levels, so this is a very big thing for us,” Dale Lois, a Fishkill, N.Y., lawyer who is representing the $3.2 billion Poughkeepsie-based credit union, told the Credit Union Journal this morning.
Hudson Valley, a one-time IBM employees credit union, has sued the New York State Department of Taxation and Finance, claiming that it is shielded by the Federal CU Act from paying the state tax. Under the Federal CU Act, federally chartered credit unions are considered federal instrumentalities and thus, are exempt from both federal and state taxes. But the lower courts dismissed this argument and asserted that the state’s mortgage recordation tax is a levy on the privilege of a mortgagee to record their deed and not a tax on the credit union.
